JLBC - Monthly Fiscal Highlights

July 2017

Summary
1716 W. Adams
Phoenix, AZ 85007
Phone:
(602) 926-5491
Fax:
(602) 926-5416

The state’s Fiscal Year 2017 ended on June
30th. The state will process year-end
transactions through July 21 and continue its
book closing process over the next several
months.
Based on preliminary information received so
far, this Monthly Fiscal Highlights provides an
initial snapshot of FY 2017 revenues and
spending, along with a revised estimate of
the FY 2017 ending balance.
The following summarizes the state’s financial
status for FY 2017:

www.azleg.gov/jlbc.htm

"The state’s
bottom-line
revenue
growth rate
was the lowest
since FY 2009,
excluding the
expiration of
the 1-cent

Revenues
• June General Fund collections were $24
million above forecast. During the month,
the state saw significant forecast gains in
the Sales Tax category, which was largely
the result of increased estimated Sales Tax
payments from large taxpayers. These
gains were offset by losses across the
state’s other revenue categories.
• Year-to-date FY 2017 General Fund
revenues were $(17) million below the
enacted budget forecast.
• FY 2017 General Fund revenues were $20
million above FY 2016, or only 0.2% over the
prior year (excluding the state’s carry
forward balance). The state saw varying
performance among its main tax
categories – however, the overall increase
in tax collections was offset by growth in
Urban Revenue Sharing and a reduction in
one-time fund transfers, leading to minimal
growth in bottom-line revenue collections.

temporary

Summary
• Ending Balance ................................................... 2
• Operating Fund Balance .................................. 2
• FY 2017 Revenue................................................. 2
• FY 2017 Spending................................................ 3

June Revenues ........................................................ 4
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
July 20, 2017.

Spending
• Based on preliminary spending data from
the state’s General Accounting Office
(GAO), FY 2017 General Fund spending is
estimated to be $9.56 billion, which is an
increase of 0.5% over the prior year.
• FY 2017 expenditures were $(75) million
lower than the budgeted FY 2017 spending
amount. This $75 million of savings is
allocated between 2 broad categories: $55
million from ADOT highway construction
projects and $20 million from lower state
agency spending.
• In terms of ADOT highway construction, the
FY 2017 budget appropriated $55 million to
ADOT for 2 highway construction projects –
$30 million for the widening of Interstate 10
in Pinal County and $25 million for upgrades
to State Route 189 near the Mariposa Port
of Entry. The enacted budget had assumed
these monies would be expended during
FY 2017, instead none of these funds were
expended during the year as both projects
are still in the planning phase.

Table of Contents

Sales Tax (FY
2014).”

• The state’s bottom-line revenue growth rate
was the lowest since FY 2009, excluding the
expiration of the 1-cent temporary Sales Tax
(FY 2014).
• FY 2017 General Fund revenues totaled
$9.79 billion. This amount consists of $9.50
billion from current FY 2017 revenue
collections and a $284 million beginning
balance that was carried forward from
FY 2016.

Monthly Indicators.................................................. 6
JLBC Meeting .......................................................... 9
JCCR Meeting ....................................................... 11
Summary of Recent Agency Reports
• ADOA – Health/Dental Plans .......................... 12
• ADOA – Health Insurance Trust Fund ............ 12

• AHCCCS – Graduate Medical Education ... 12
• AHCCCS – Hospital Assessment Report ........ 12
• AHCCCS – Interstate Agreement Report ..... 12
• AHCCCS/DHS – Reconciliation Payments.... 13
• Atty. General – Internet Crimes Report ......... 13
• Atty. General – Legal Settlements Report .... 13
• DCS – Monthly Hiring Report ........................... 14
• ADC – Inmate Management System ............ 14
• DES – ATP Coolidge Campus Placements ... 14
• Ombudsman – Annual Report ....................... 15

June Spending ...................................................... 15
Arizona Economic Trends...................Appendix A

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JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Summary (Continued)
Ending Balance
At the end of the Regular Session, FY 2017 was projected
to have an ending balance of $171 million.
The ending balance is now projected to be $229 million.
This revised estimate represents the FY 2017 revenue
forecast loss of $(17) million, and $75 million of savings
from lower than expected spending, for a net increase
of $58 million.
As noted above, the state’s revenue loss and spending
savings are roughly equivalent, with the $(17) million
revenue loss mostly offsetting the $20 million gained from
lower agency spending. As such, the increase in the
state’s projected ending balance is almost entirely due
to artificial savings generated by the delay of ADOT
highway construction spending.
The improved FY 2017 ending balance due to the delay
in ADOT capital spending would, all else being equal,
help to improve the state’s FY 2018 financial status.
However, if the $55 million of ADOT spending is simply
shifted into FY 2018, the FY 2018 ending balance will be
$41 million. This level would be slightly higher than the
budgeted FY 2018 ending balance of $38 million.
The Executive Branch is required to provide a preliminary
estimate of the FY 2017 ending balance by September
15, 2017. By law, the Department of Administration is
required to publish its final FY 2017 accounting by
December 1, 2017.
Operating Fund Balance
The state’s fiscal health can also be measured by the
operating fund balance. The state pays its bills out of
the operating fund balance, which consists of the
General Fund and certain dedicated funds. The ending
FY 2017 operating balance was $2.4 billion, compared to
$2.7 billion a year earlier. As of mid-July, the operating
fund balance has fallen to $1.3 billion, primarily due to
large K-12 rollover payments that occur in the beginning
of the fiscal year.
In addition, the state’s Budget Stabilization Fund (BSF)
balance at the end of FY 2017 was approximately $460
million.
FY 2017 Revenue
As mentioned above, overall FY 2017 General Fund
revenues were essentially flat, growing by only $20 million
or 0.2%. Excluding Urban Revenue Sharing and one-time
fund transfers, “base” General Fund collections
increased by 1.5% during the year.
Of the state’s 4 largest revenue sources, 2 posted
forecast gains during the year while the remaining 2 had
forecast losses.

The largest gain was in the Sales Tax category, which
was $55 million above forecast for the year. Most of
these gains occurred in June, which was likely the result
of an increase in estimated payments made by larger
taxpayers due to technical reasons.
The biggest losses occurred in the Corporate Income
Tax category, which declined by (35.5)% during the year
and was $(52) million below forecast. The significant
decline is the result of reductions to the state’s
Corporate Income Tax rate.
Table 1 displays the performance of these revenue
categories as compared to the enacted forecast.
Table 1

Growth Rates and Collections Compared to
Enacted Forecast By Revenue Category

Budgeted

Prelim.
Actual

Above/
(Below)
Forecast

Sales

3.2%

4.5%

$55 M

Individual Income

3.8%

4.1%

$12 M

Corporate Income

(26.3)%

(35.5)%

$(52) M

Insurance Premium

5.1%

2.8%

$(11) M

Sales Tax
Sales and use tax revenue increased by 4.5% in FY 2017,
which was $54.6 million above the enacted budget
forecast.
Sales tax collections by category for FY 2017 are shown
in Table 2 below. The 5 major categories of the state’s
sales tax shown in the table account for approximately
90% of total collections.
Table 2
FY 2017 Sales Tax Growth Rates
Compared to Prior Year
Retail
Contracting
Use
Restaurant & Bar
Utilities

3.7%
6.8%
6.2%
6.7%
(1.2)%

Individual Income Tax
Individual Income Tax grew by 4.1% in FY 2017 and
ended up $12 million above the enacted budget
forecast. Most of this forecast overage is related to
Individual Income Tax withholding, which grew by 5.6%,
the fastest growth rate since FY 2011. That rate of

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Summary (Continued)
growth is comparable to the 5.4% growth in Arizona's
wage and salary income in calendar year (CY) 2016.
A January 1, 2017 increase in the minimum wage to
$10 an hour under Proposition 206 may have also
served to increase FY 2017 withholding collections.
A portion of added minimum wage revenues,
though, may ultimately be refunded in FY 2018,
depending on the extent that minimum wage
workers can reduce taxes owed with exemptions,
deductions and credits.
Individual Income Tax payments decreased (0.7)%
during FY 2017, including a (3.0)% decrease in final
payments. A recent report from the Nelson A.
Rockefeller Institute of Government found that a
majority of states experienced reductions in final
payment collections in the 5 months from January to
May 2017. Changes in final payments are often
driven by capital gains income.
The Rockefeller report suggests that a portion of the
nationwide negative trend in payments may reflect
taxpayers deferring capital gains to Tax Year 2017, in
anticipation of potential federal income tax
reductions. This may have served to lower final
payments associated with Tax Year 2016 income,
which were due April 2017. This explanation appears
to be consistent with a (4.1)% year-over-year
decrease in the state's April 2017 final payments.
Capital gains were likely also affected by poor stock
market performance during CY 2016. Growth in the
S&P 500 slowed to 1.5% in CY 2016, from 6.8% in CY
2015
Corporate Income Tax
During FY 2017, Corporate Income Taxes were
(35.5)% below FY 2016 and $(52.4) million below the
enacted forecast. The state collected $368.1 million
in Corporate Income Taxes during FY 2017, the
lowest amount since FY 2002. Insurance Premium Tax
has now overtaken Corporate Income Tax as the
state’s 3rd largest revenue category.
Without access to timely corporate tax return data, it
is difficult to determine the exact reasons for the
large decline in collections in FY 2017. The main
reason for the (35.5)% decline in collections is likely
previously enacted legislation, most notably the
multi-year phase-in of the current 4.9% corporate tax
rate and the 100% apportionment sales factor.

Insurance Premium Tax
Insurance Premium Tax revenues grew 2.8% in FY 2017
and were $(11) million below the enacted budget
forecast. The FY 2017 rate of growth represented a
significant slowdown from rates of over 9% in FY 2015
and FY 2016. The high growth in recent prior years was
largely driven by increased Medicaid enrollment
following a January 1, 2014 expansion of coverage.
Detailed data of FY 2017 collections by insurance line
will not be available until September 2017. It is likely,
though, that the FY 2017 slowdown in insurance
premium tax collections again reflect Medicaid
enrollment growth, which has slowed from 10.2% in
FY 2015 and 8.3% in FY 2016 to 3.8% in FY 2017. A
reduction in the tax rate for some insurance lines, from
2.0% CY 2015 to 1.95% in CY 2016, also contributed to
the low growth of collections in FY 2017.
FY 2017 Spending
FY 2017 General Fund spending is estimated to be
$9.56 billion, which is an increase of 0.5% above
FY 2016. This spending level is $(75) million below the
amount assumed in the enacted budget.
Each year during the budget process, the projected
spending levels assume a certain level of
“revertments”, which are appropriations to agencies
which remain unspent. To the extent that the amount
of agency revertments is more than assumed, the
actual level of spending can be lower than projected
in budget estimates.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

June Revenues
Table 3

June
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2017
Collections
$ 1,305.8
$ 9,504.0

Sales Tax collections of $419.5 million were 14.3% above
June of last year and $45.2 million above the forecast for
the month. Total FY 2017 sales tax revenue of $4.51
billion was 4.5% above the amount collected in FY 2016
and $54.6 million above forecast.
However, as discussed in the Summary section, the surge
in revenue in June was mainly for technical reasons.
Absent this technical issue, Sales Tax revenue growth
would have been 6.1% in June and 3.8% for all of
FY 2017.
Individual Income Tax net revenues of $402.2 million in
June were $26.9 million more than in the prior year and
$(1.0) million below forecast. Total FY 2017 revenues
have grown by 4.1% and are $11.9 million above
forecast.
As indicated in Table 4, June withholding increased by
8.7% from last year. The monthly increase brings
withholding tax collections for the fiscal year to 5.6% over
the prior year. This amount is $26.5 million above the
forecast for the year.
June estimated and final payments of $121.8 million
were 2.3% above last year, but were $(0.9) million below
the forecast. Total FY 2017 payments were $(26.8) million
below the forecast and (0.7)% below FY 2016.
June Individual Income Tax refunds totaled $(42.0) million
– this compares to $(40.3) million in June 2016 and a
forecasted amount of $(34.7) million. In total FY 2017
refunds have led to a $12.2 million revenue increase
compared to the enacted forecast.
Table 4

Individual Income Tax Growth Rates
Compared to Prior Year
June
YTD
Withholding
8.7%
5.6%
Estimated/Final Payments
2.3%
(0.7)%
Refunds
4.1%
3.4%
Corporate Income Tax net collections were $71.5 million
in June, which was $(23.5) million less than in the prior
year and $(1.1) million below the forecast. Total FY 2017
collections of $368.1 million were (35.5)% below the prior
year and $(52.4) million below forecast. This decrease is

Difference From
Enacted Forecast
$ 23.7
$ (17.4)

Difference
From FY 2016
$ 125.7
$
19.6

probably the result of the decline in the Corporate
Income Tax rate.
Insurance Premium Tax collections of $95.4 million in
June were $8.1 million above the prior year and $6.6
million above the forecast. Total FY 2017 revenues are
2.8% above last year, but $(11.4) million below forecast.
Prior month tobacco and liquor tax are not typically
available for publication in the Monthly Fiscal
Highlights. Through the end of May, year-to-date
tobacco tax revenues are (6.6)% below FY 2016 and
are$(1.5) million below forecast. Year-to-date liquor
collections through May are 2.7% above FY 2016 and
$0.3 million above forecast. Due to the late data, June
collections are simply reported at the forecast level.
The Lottery Commission reports that June ticket sales
were $76.0 million, which is $9.6 million, or 14.5%, above
sales in June 2016. Total FY 2017 ticket sales were $852.0
million, which is (2.2)% below last year’s sales. The
annual decrease reflects the one-time nature of
January 2016 ticket sales associated with a recordbreaking $1.4 billion Powerball jackpot. In terms of
General Fund collections, total FY 2017 lottery revenues
are $13.7 million above FY 2016 and $9.9 million above
forecast.
Highway User Revenue Fund (HURF) collections of $122.2
million in June were up 5.9% compared to June of last
year and were $1.5 million above forecast. Total FY
2017 revenues are 3.6% above last year, but $(10.2)
million below forecast.
Due to delays in reporting final May revenues for various
revenues sources, DOR has made technical adjustments
to prior month collection figures. For June, DOR has
decreased the amount of prior General Fund revenue
collections by $(0.7) million, and the adjustment has
been included in the reported total FY 2017 results.

5
Table 5

General Fund Revenue:
Change from Previous Year and Budget Forecast
June 2017
Current Month

FY 2017 YTD (Twelve Months)

Change From
Actual
June 2017

June 2016
Amount

Change from
Budget Forecast

Percent

Amount

Actual

Percent

June 2016

June 2017

Amount

Budget Forecast
Percent

Amount

Percent

Taxes
Sales and Use

$419,465,208

$52,509,057

402,158,377

26,940,447

71,510,700

(23,535,999)

Property

2,916,203

Luxury - Tobacco

2,269,386
2,778,449

Income - Individual
- Corporate

- Liquor
Insurance Premium
Other Taxes
Sub-Total Taxes

95,389,654
34,705

$4,506,161,067

$192,018,307

(1,049,732)

(0.3)

4,130,447,307

162,527,806

(24.8)

(1,108,309)

(1.5)

368,141,785

(202,405,912)

(35.5)

(52,374,015)

(12.5)

(3,545,745)

(54.9)

(4,937,455)

(62.9)

32,538,497

(5,944,838)

(15.4)

(7,612,703)

(19.0)

(424,993)

(15.8)

0

0.0

23,038,001

(1,882,657)

(7.6)

(1,505,498)

(6.1)

(392,787)

(12.4)

0

0.0

34,568,884

443,494

1.3

6,644,776

7.5

504,339,292

13,763,011

2.8

8,112,692
(825,310)

$996,522,683

$58,837,361

Lottery

4,285,800

4,285,800

License, Fees and Permits

3,633,948

14.3 %
7.2

9.3
(96.0)
6.3 %

$45,227,093

(823,990)
$43,952,383

12.1 %

(96.0)
4.6 %

2,740,742

(5,217,728)

$9,601,975,576

$153,301,485

4.5 %
4.1

(65.6)
1.6 %

$54,604,067
11,895,208

346,585

1.2 %
0.3

1.0

(11,440,808)

(2.2)

(5,615,658)

(67.2)

($11,702,823)

(0.1) %

Other Revenue
(317,237)

--

4,285,800

78,690,443

13,717,693

21.1

9,929,143

14.4

(8.0)

411,442

12.8

--

38,438,028

7,631,053

24.8

6,599,728

20.7

(42,738)

(0.2)

17,000,959

3,512,990

26.0

Interest

17,421,386

3,925,687

29.1

Sales and Services

14,028,489

(2,794,609)

(16.6)

(1,441,219)

(9.3)

41,941,206

(750,480)

(1.8)

(2,885,093)

(6.4)

Other Miscellaneous

53,177,872

(18,434,042)

(25.7)

(16,359,806)

(23.5)

85,986,721

(6,580,181)

(7.1)

(10,595,479)

(11.0)

Disproportionate Share

94,321,650

Transfers and Reimbursements

33,824,681

(18,666,928)

$220,693,826

($31,545,990)

Sub-Total Other Revenue
TOTAL BASE REVENUE

$1,217,216,508

455,339

$27,291,372

0.5
(35.6)
(12.5) %
2.3 %

50
(7,884,755)

0.0
(18.9)

94,321,650

455,339

64,129,503

(18,522,269)
($535,854)

($21,031,226)

(8.7) %

$420,508,512

$22,921,157

1.9 %

$10,022,484,087

$152,765,630

0.5
(22.4)

(697,941)

50
(8,759,397)

(3.9)

0.0
(12.0)

(0.1) %

($6,408,988)

(1.5) %

1.5 %

($18,111,811)

(0.2) %

Other Adjustments
Urban Revenue Sharing

(55,298,514)

One-Time Transfers

143,900,000

103,200,700

88,601,486

98,371,708

$1,305,817,994

$122,166,630

Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

(4,828,993)

9.6

32

(0.0)

(663,582,168)

(57,947,842)

253.6

729,948

0.5

145,091,548

(75,205,007)

9.6

-- %

729,980

0.8 %

(518,490,620)

(133,152,848)

34.6 %

$125,663,079

10.6 %

$23,651,137

1.8 %

$9,503,993,468

$19,612,782

0.2 %

($17,381,830)

(0.2) %

$6,814,314

5.9 %

$1,546,274

1.3 %

$1,405,447,990

$48,695,852

3.6 %

($10,152,011)

(0.7) %

(34.1)

32
729,948
729,981

(0.0)
0.5
(0.1) %

Non-General Funds
Highway User Revenue Fund

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Monthly Indicators
NATIONAL
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Real Gross Domestic
Product (GDP) increased at an annual rate of 1.4% in the
first quarter of 2017. This estimate reflects a slowdown
from the growth of 2.1% experienced in the prior quarter.
The slowdown relative to the prior quarter was primarily
due to a deceleration in consumption expenditures and
a decrease in inventory investment. Declining
performance in these categories was partly offset by
growth in net exports and residential and business
investment. Economists expect a portion of the
slowdown in GDP growth reflects temporary seasonal
variations not fully removed from the estimates.
The Conference Board’s U.S. Consumer Confidence
Index increased by 1.1% to 118.9 in June, after falling
during the prior 2 months from its 16-year high of 124.9 in
March. The latest reading is 22.1% above the index in
June 2016. The monthly increase reflected an improved
assessment of current economic conditions. The
percentage of surveyed individuals that think jobs are
plentiful minus the percent that think jobs are scarce
rose from 11.7% to 14.8% during the month. Growth in
the overall index was limited by declining expectations
of economic conditions 6 months into the future.
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Personal Consumption
Expenditure Price Index (PCEPI) decreased (0.1)% in
May. The overall monthly increase was partly driven by
a (3.0)% drop in energy prices. Core inflation (all items
less food and energy) increased by 0.1% during the
month. The index had reached year-over-year growth
of 2.1% in February 2017, which is above the Federal
Reserve Bank's (Fed) 2.0% annual inflation target. The
index's annual growth, though, has since decreased to
1.4% in May, leaving the Fed greater flexibility in setting
short-term interest rates.
Consumer prices, as measured by the U.S. Consumer
Price Index (CPI), was unchanged in June and
increased 1.6% above June 2016 prices. The energy
index was a major contributor to the monthly decrease,
declining by (1.6)%, mostly driven by a (2.8)% decrease
in the gasoline index. A number of other indexes
decreased, including airline fares, used cars, and
wireless telephone services. Core inflation (all items less
food and energy) increased 0.1% for the month. Other
indexes that increased include shelter, medical care,
motor vehicle insurance, and education.
The Conference Board's U.S. Leading Economic Index
increased 0.3% in May to 127.0 and stands 3.5% above its
May 2016 reading. Of the index's 10 components, 8

made positive contributions for the month. Interest rate
spread made its typically strong contribution, and the
average consumer expectations and Institute of Supply
Management (ISM) index for new orders bolstered the
increase as well. Building permits was the only
negative contributor for the month, declining for the
second month in a row.
ARIZONA
Housing
Single-family housing construction is increasing. In May,
Arizona’s 12-month total of single-family building
permits was 25,491, or 6.6% more than a year ago. The
comparable single-family permit growth rate for the
entire U.S. was 8.4%.
The 12-month total of multi-family building permits has
started to increase again. In May, Arizona’s total of
11,690 multi-family building permits was 26.3% more
than in 2016. Nationwide multi-family permits were
(6.7)% lower than in 2016.
Tourism
Revenue per available room was $74.99 in May, which
was 6.4% above the amount in May 2016. Ridership
through Phoenix Sky Harbor Airport during the month
was up 1.9% compared to May 2016.
Employment
In May, the Average Weekly Hours worked by
individuals in Arizona’s private sector was 34.4 hours.
This workload was (1.7)% below the level during the
prior month and equal to the level in May 2016.
The Average Hourly Earnings received by private sector
workers was $25.11, which is (0.6)% below the average
in the prior month. May earnings were 3.9% above the
average in May 2016. This year-over-year growth for
this month's reading is the first that has been below
4.0% during 2017.
The U.S. Department of Commerce Bureau of
Economic Analysis quarterly releases estimates of
annual Personal Income received in each state. This
measure includes wages and salaries, proprietors’
income, dividends, interest, rent, and various
supplements to income while excluding capital gains,
contributions for government social insurance, and
pension benefit payments. In the first quarter of 2017,
Arizona personal income increased year-over-year by
3.8%, to $283.1 billion. Overall growth in personal
income largely mirrored that of its largest component,
wages and salaries, which grew 3.9% during the same
period. The latest wage and salary growth of 3.9%
reflects a slowdown from growth of 4.8% during 2016.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Monthly Indicators (Continued)
The Office of Economic Opportunity (OEO) reported
that 19,802 initial claims for unemployment insurance
were filed in May, a decrease of (2.5)% compared to
the same month last year.
According to OEO, the state had a total of 28,864
claimants receiving unemployment insurance benefits
in May, an increase of 12.2% from April. This figure is
(7.5)% below the May 2016 level.
State Agency Data
At the beginning of July 2017, the total AHCCCS
caseload was 1.87 million members. Since the federal
health care expansion in January 2014, the overall
AHCCCS population has grown by 614,900 members.
Total monthly enrollment decreased by (800) members
during June. The overall change in membership was
largely driven by the Traditional and Proposition 204
population of low income parents and children, which
collectively decreased by (1,100), or (0.1%), in June.
Laws 2016, Chapter 112 reopened enrollment in the
KidsCare program for children with family incomes
above those in the Traditional population, beginning
September 1, 2016. Following the enrollment freeze in
January 2010, the KidsCare caseload had dropped to
500 members by August 2016. Through July 1,
enrollment in the program reached 21,600, or 600 more
than the prior month’s enrollment.
In January 2014, the state started accepting new
enrollment to the Proposition 204 childless adults
program. In June 2017, the childless adult population
decreased by (300), or (0.1)%. At 316,800, this
population is 3.2% higher than a year ago.
The state also opted to expand adult Medicaid
coverage to 133% of FPL. Their enrollment was largely
unchanged in June and now totals 82,200 individuals.
Enrollment is 2.4% higher than a year ago. The share of
this population's cost that is funded by the federal
government decreased from 100% to 95% in January.
There were 17,513 TANF recipients in the state in June,
representing a (0.3)% monthly caseloads decrease from
May. The year-over-year number of TANF recipients has
declined by (13.1)%. The statutory lifetime limit on cash
assistance is 12 months.
The Supplemental Nutrition Assistance Program (SNAP),
formerly known as Food Stamps, provides assistance to
low-income households to purchase food. In June,
911,845 people received food stamp assistance in the
state, representing a decrease of (326) recipients over

May caseloads. Compared to June caseloads last
year, the level of food stamp participation has
declined by (5.2)%.
The inmate population was 42,313 as of June 30,
2017. This is a (1.5 )% decrease since last June. The
population increased by 0.3% since May 2017.
Based on information the Department of Child Safety
provided for May 2017, reports of child maltreatment
totaled 47,499 over the last 12 months, a decrease of
(3.7)% over the prior year. There were 16,964 children
in out-of-home care as of April 2017, or (10.1)% less
than in April 2016. Compared to the prior month, the
number of out-of-home children increased by 0.2%.

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017
Table 6

MONTHLY INDICATORS

Indicator
Arizona
Employment
- Regular Unemployment Rate
- Total Unemployment Rate (discouraged/underemployed)
- Initial Unemployment Insurance Claims
- Unemployment Insurance Recipients
- Non-Farm Employment - Total
Manufacturing
Construction
- Average Weekly Hours, Private Sector
- Average Hourly Earnings, Private Sector
Sales
- Retail Taxable Sales
Motor Vehicles/Misc. Auto
Furniture/Home Furnishings
Building Material/Lawn & Garden
Building
- Residential Building Permits (12-month avg)
Single-family
Multi-family
- Maricopa County/Other, Home Sales (ARMLS)
Single-Family (Pending Sales)
- Maricopa County/Other, Median Home Price (ARMLS)
Single-Family (Pending Sales)
- Phoenix S&P/C Home Price Index (2000 = 100)
- Maricopa Pending Foreclosures
- Greater Phoenix Total Housing Inventory, (ARMLS)
Tourism
- Phoenix Sky Harbor Air Passengers
- National Park Visitors
- State Park Visitors
- Revenue Per Available Hotel Room
General Measures
- Arizona Consumer Confidence Index (1985 = 100)
- Arizona Leading Index -- 6 month projected growth
- Arizona Personal Income
- Arizona Population
- State Debt Rating
Standards & Poor’s/Moody’s
Outlook
Agency Measures
- AHCCCS Recipients
Acute Care Traditional
Prop 204 Childless Adults
Other Prop 204
Adult Expansion
Kids Care I
Long-Term Care – Elderly & DD
Emergency Services
- Department of Child Safety (DCS)
Annual Reports of Child Maltreatment (12-month total)
DCS Out-of-Home Children
Filled Caseworkers (1406 Budgeted)
- ADC Inmate Growth
- Department of Economic Security
- TANF Recipients
- SNAP (Food Stamps) Recipients
- Judiciary Probation Caseload
Non-Maricopa
Maricopa County
United States
- Gross Domestic Product
(Chained 2009 dollars, SAAR)
- Consumer Confidence Index (1985 = 100)
- Leading Indicators Index (2010 = 100)
- Consumer Price Index, SA (1982-84 = 100)
- Personal Consumption Price Index (2009 = 100)

Change From
Prior Period

Change From
Prior Year

Time Period

Current Value

May
1st Q 2017
May
May
May
May
May
May
May

5.1%
10.9%
19,802
28,864
2,747,000
162,000
138,300
34.4
$25.11

0.1%
0.1%
(14.4)%
12.2%
(0.5)%
0.0%
(0.7)%
(1.7)%
(0.6)%

(0.2)%
(0.8)%
(2.5)%
(7.5)%
1.8%
1.6%
3.4%
0.0%
3.9%

February
February
February

$952.9 million
$331.7 million
$379.8 million

(12.6)%
(27.7)%
(1.9)%

5.8%
3.1%
11.4%

May
May

25,491
11,690

2.2%
(2.8)%

6.6%
26.3%

May

6,878

9.2%

5.1%

May
April
May
May

$259,000
167.64
2,909
23,520

0.7%
0.8%
(2.9)%
(2.7)%

9.7%
5.7%
(24.2)%
(9.0)%

May
January
April
May

3,806,998
586,991
334,438
$74.99

(0.8)%
(9.1)%
(15.3)%
(22.0)%

1.9%
5.2%
29.1%
6.4%

4th Q 2016
May
1st Q 2017
July 2016

91.7
1.7%
$283.1 billion
6,931,071

3.7%
(3.3)%
1.0%
N/A

12.9%
(4.4)%
3.8%
1.7%

May
May

AA / Aa2
Stable

N/A
N/A

N/A
N/A

July 1st

1,873,008
1,077,666
316,794
194,176
82,199
21,626
59,923
120,624

0.0%
(0.1)%
(0.1)%
0.0%
0.0%
2.7%
0.4%
(0.4)%

May
April
June
June

47,499
16,964
1,345
42,313

0.3%
0.2%
2
0.3%

June
June

17,513
911,845

(0.3)%
0.0%

March
March

19,130
28,221

1st Q, 2017 (3rd
Estimate)
June
May
June
May

52
172

3.6%
1.3%
3.2%
6.6%
2.4%
N/A
2.8%
3.8%
(3.7)%
(10.1)%
(10)
(1.5)%
(13.1)%
(5.2)%
486
579

$16.9 trillion

2.1%

1.4%

118.9
127.0
243.9
112.1

1.1%
0.3%
0.0%
(0.1)%

22.1%
3.5%
1.6%
1.4%

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

JLBC Meeting
At its June 20, 2017 meeting, the Joint Legislative Budget
Committee considered the following issues:
Arizona Department of Administration – Review of FY
2018 Projects (Automation Projects Fund) – The
Committee gave a favorable review of $3.0 million in
total expenditures in FY 2018 for Arizona Strategic
Enterprise Technology (ASET) projects, consisting of: $1.0
million for Security, Privacy, and Risk; $500,000 for Digital
Government; and $1,500,000 for Project
Management. The favorable review included reporting
requirements.
Arizona Department of Administration – Review of 90/10
E-Licensing Project (Automation Projects Fund) – The
Committee gave a favorable review of $595,500
appropriated from the Automation Projects Fund in FY
2018 for a 90/10 E-Licensing Project.
Arizona Department of Administration/Arizona
Department of Education – Review of AELAS Expenditure
Plan (Automation Projects Fund) – The Committee gave a
favorable review of the expenditure plan of $7.3 million
from the Automation Projects Fund for the Arizona
Education Learning and Accountability System
(AELAS). The favorable review included numerous
provisions, including reporting requirements.
Arizona Department of Administration/Department of
Environmental Quality – Review of myDEQ Expenditure
Plan (Automation Projects Fund) – The Committee gave a
favorable review of the FY 2018 expenditure plan of $3.2
million from the Automation Projects Fund for Phase 4 of
the development of DEQ's web portal, myDEQ. The
favorable review included reporting requirements.
Arizona Department of Administration/Industrial
Commission – Review of Claim Processing Project
(Automation Projects Fund) – The Committee gave a
favorable review of $1.0 million in proposed FY 2018
expenditures from the Automation Projects Fund for the
Industrial Commission Claims Processing System Upgrade.
Arizona Department of Administration/Department of
Revenue – Review of Data Center Equipment Upgrade
(Automation Projects Fund) – The Committee gave a
favorable review to $5.5 million of DOR's $11.0 million
proposed expenditure plan from the Automation Projects
Fund to replace DOR's data center
hardware. DOR shall submit a Project Investment
Justification (PIJ) to the Information Technology Advisory
Committee (ITAC) for review and approval. Subsequent
to ITAC review and approval, DOR may submit a request
for the Committee to review the remaining $5.5
million. DOR shall also contract with a third-party

consultant to provide quarterly third-party reviews
of the project to the Chairman of JLBC, the
Committee and JLBC Staff.
Arizona Department of Administration – Review of
Arizona Financial Information System Transaction
Fee – The Committee gave a favorable review of
the proposed 32.5-cent transaction fee to state
agencies for the operation of AFIS.
Arizona Department of Administration – Review of
Risk Management Deductible – The Committee
gave a favorable review of the proposed
deductible increase from $100 to $2,500 for
agencies with budgets of at least $1.0 million.
Arizona Health Care Cost Containment System –
Review of Expenditure Plan for Targeted Investment
Program – The Committee gave a favorable review
of the $300.0 million expenditure plan for AHCCCS'
Targeted Investments Program of incentive
payments to health providers. AHCCCS will expend
$300.0 million in cumulative funding between FY
2018 and FY 2022, primarily from Federal Funds. The
favorable review included reporting requirements.
AHCCCS/Department of Economic
Security/Department of Child Safety – Review of
Capitation Rate Changes for Plan Years 2017 and
2018 – The Committee gave a favorable review CYE
2017 capitation rate adjustments for the Arizona
Long Term Care System (ALTCS) and the Children's
Rehabilitative Services Program and Calendar Year
End (CYE) 2018 adjustments for the ALTCSDevelopmental Disabilities program and the
Comprehensive Medical and Dental program. The
favorable review included a provision with reporting
requirements.
Attorney General – Review of FY 2018 Internet
Crimes Against Children (ICAC) Expenditure Plan –
The Committee gave a favorable review of the
AG's expenditure plan for the $1.3 million FY 2018
appropriation to the ICAC Enforcement line item.
Attorney General – Review of Uncollectible Debts –
The Committee gave a favorable review of the
AG's FY 2017 list of $50.9 million in uncollectible
debt, excluding the $5.6 million owned by National
Century Financial Enterprises from this review.
Department of Child Safety – Review of FY 2017 Third
Quarter Benchmarks – The Committee gave a
favorable review of the report assessing DCS's
progress towards meeting benchmarks for the
number of caseworkers, the number of backlog
and open reports, and the number of children in
out-of-home-care.

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

JLBC Meeting (Continued)
Department of Child Safety – Review of Line Item
Transfers – The Committee gave a favorable review of
the transfer of $4.1 million from the General Fund and
$8.6 million in expenditure authority funds across several
line items to Adoption Services, Emergency and
Residential Placements, Training Resources, DCS Child
Care Subsidies, and In-Home Mitigation.
Department of Child Safety – Review of Retention Pay
Expenditure Plan – The Committee gave a favorable
review of the $1.7 million FY 2018 expenditure plan for
the Retention Pay line item, which consists of: $1.0 million
for retention stipends, $392,300 for program manager
salary adjustments, and $316,400 for one-time bonuses
for individuals or groups of employees with excellent
performance. The favorable review included provisions
with reporting requirements.
Arizona Department of Corrections – Review of Inmate
Health Care Per Diem Change – The Committee gave a
favorable review to increase the inmate health care per
diem from $12.06 to $12.54 with an additional provision.
Department of Economic Security – Review of
Developmental Disabilities Equity Expenditures – The
Committee gave a favorable review of DES' plan to
expend $14.5 million of equity monies on Division of
Developmental Disabilities state-only programs.
Arizona Department of Education – Review of Joint
Technical Education District (JTED) Quarterly and Annual
Reports – The Committee gave a favorable review of
ADE's December 31, 2016 and March 31, 2017 JTED
quarterly reports. It also reviewed ADE's FY 2016 JTED
annual report.
Arizona Department of Environmental Quality – Review of
Safe Drinking Water Expenditure Plan – The Committee
gave a favorable review of the ADEQ's expenditure plan
for $1.8 million from the Safe Drinking Water Program
Fund for the Safe Drinking Water Program.
Department of Public Safety – Review of BTSF Expenditure
Plan – The Committee gave a favorable review of the
$1.3 million expenditure plan for local support funded by
the border Strike Task Force (BTSF). The plan allocates
$761,700 for BSTF local law enforcement positions and
$500,000 for border-related prosecution and jail costs.
Department of Public Safety – Review of the Expenditure
Plan for the GIITEM Fund Border Security and Law
Enforcement Subaccount – The Committee gave a
favorable review of DPS' $2.4 million FY 2018 expenditure
plan for the Gang and Immigration Intelligence Team
Enforcement Mission (GIITEM). The expenditure plan
includes distributions to all 15 county sheriffs, 4
municipalities, and the Arizona Department of
Corrections.

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

JCCR Meeting
At its June 20, 2017 meeting, the Joint Committee on
Capital Review considered the following issues:

of the grant to Pima County as well as standard
reporting requirements.

Arizona Department of Administration – Review of FY
2018 Building Renewal Plan – The Committee gave a
favorable review of $8,300,000 for building renewal
projects. These monies were appropriated for FY 2018
from both the General Fund and the Capital Outlay
Stabilization Fund. Reviewed projects include;
preventative building maintenance, safety related
projects, HVAC system upgrades, and other system
improvements. The favorable review included provisions
with reporting requirements.

Arizona Exposition and State Fair Board – Review of
FY 2017 Capital Improvement Expenditures – The
Committee gave favorable review of 9 capital
projects with an estimated total cost of $303,000.
The favorable review included provisions with
reporting requirements

Arizona Department of Administration – Consider
Recommending FY 2017 Partial Rent Exemption – The
Committee recommended a full rent exemption of
$(238,500) in FY 2017 and FY 2018 for the Secretary of
State (SOS), as well as an ongoing rent exemption in
future years unless the Legislature provides additional
funding to the SOS to cover the cost of the Talking Book
Library property.

Universities – Northern Arizona University – Review of
Recital Hall Financing Project – The Committee
gave a favorable review of a $15,000,000 project to
construct a 250-seat recital hall and to renovate
existing space in the Performing and Fine Arts
building. The project will be funded by a
combination of system revenue bonds and gifts.
The favorable review included the two standard
university financing provisions.

Arizona Department of Administration & State
Department of Corrections – Review and Approval of
Lease Purchase Refinancing – The Committee gave a
favorable review of the refinancing of a lease-purchase
agreement that was issued in 2008 to fund additional
ADC prison beds. The refinancing of $43.4 million in
outstanding principal is estimated to result in savings of
$985,400. The Committee also adopted a standard debt
financing provision.
Department of Corrections – Review of FY 2018 Building
Renewal Plan and Capital Projects – The Committee
gave a favorable review of $1,450,000 for the
replacement of locking systems at ASPC – Eyman. The
Committee also gave favorable review to $5,464,300 for
the FY 2018 Building Renewal Allocation Plan, which
included equipment replacement and structural repairs.
Reallocations of the FY 2016 and FY 2017 Building
Renewal Plans were also reviewed by the Committee.
The favorable review also included provisions with
reporting requirements.
Department of Emergency and Military Affairs – Review
of Proposed Expenditures from the Military Installation
Fund – The Committee gave a favorable review of the
department's plan to expend $1.1 million from the
Military Installation Fund. These funds will be used to
acquire a 300-acre conservation easement near Fort
Huachuca, to purchase 10 acres within the DavisMonthan Air Force Base fence line, as well as to provide
a grant to Pima County to purchase another piece of
land. The Committee adopted provisions outlining terms

Universities – Arizona State University – Review of
Tempe Power Plant Indirect Financing Project – The
Committee held this item for future consideration.

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Summary of Recent Agency Reports
Arizona Department of Administration – Report on
Performance Standards for Health and Dental Plans –
Pursuant to A.R.S. § 38-658B, the Arizona Department of
Administration (ADOA) submitted its report on
performance standards for health and dental plans
during Plan Year (PY) 2016. The number of performance
measures varies by vendor. If a vendor fails to meet any
of the measures within the specified performance range,
the vendor is required to submit a Corrective Action Plan
detailing why the measure was missed and any actions
taken to address the issue and improve performance to
meet the standard. A percentage of the vendor's
annual payment, or a previously agreed upon amount,
is then withheld by ADOA as a performance penalty.
ADOA estimates that performance penalties paid to
Benefit Services Division related to PY 2016 totaled
$360,000. (Geoffrey Paulsen)
Arizona Department of Administration – Report on the
Financial Status of the Special Employee Insurance Trust
Fund – Pursuant to A.R.S. § 38-654G, the Arizona
Department of Administration (ADOA) submitted their
required annual actuarial report on the financial status
of the Health Insurance Trust Fund (HITF). The actuarial
assumptions used to develop HITF projections include
healthcare trends (cost, utilization, and severity of
services), enrollment trends, and revenue projections
including legislative fund transfers. ADOA reported that
the plan is actuarially sound for Plan Year (PY) 2016 and
PY 2017. For PY 2018, however, the preliminary estimates
for insurance benefits are not actuarially sound, as
ADOA projects a cash-flow liquidity problem and
virtually no ending balance for the end of PY 2018. This
projection assumes the FY 2018 employer premium
increase will not continue in FY 2019. For PY 2017, ADOA
assumes a combined medical and pharmaceutical
trend of 5.3%, which consists of medical costs increasing
by 4.4% and pharmaceutical costs increasing by 8.4%.
ADOA expects medical enrollment to increase by 1.7%
for PY 2017 and 1.4% for PY 2018. (Geoffrey Paulsen)
AHCCCS – Report on Graduate Medical Education
Residency Positions – Pursuant to A.R.S. § 36-2903.01, the
Arizona Health Care Cost Containment System
(AHCCCS) submitted its annual report on the number of
residency positions funded by local, county, or tribal
governments. The agency indicates that these
contributions in FY 2017 provided $265.7 million for 1,612
residency positions at 15 hospitals. The largest recipients
included Maricopa Medical Center ($57.6 million),
Banner University Medical Center - Tucson ($57.2 million),
St. Joseph’s Hospital - Phoenix ($35.0 million), Banner
University Medical Center - Phoenix ($34.5 million), and
Phoenix Children’s Hospital ($29.2 million).

The $265.7 million in Total Funds includes local
contributions of $82.9 million and a federal match of
$182.8 million. The local government contributors
included University of Arizona ($53.7 million),
Maricopa Integrated Health System ($20.5 million),
Arizona State University ($7.7 million), and the
Mohave County ($1.0 million). (Patrick Moran)
AHCCCS – Report on the FY 2016 Hospital Assessment
– Pursuant to A.R.S. § 36-2901.08, the Arizona Health
Care Cost Containment System (AHCCCS) is required
to establish an assessment on hospital revenue,
discharges, or bed days for the purpose of funding
the state match portion of the Medicaid expansion
(adults from 100%-133% of the Federal Poverty Level)
and the entire Proposition 204 population. In
addition, A.R.S. § 36-2903.08 requires AHCCCS to
annually report the amount of estimated Medicaid
payments each hospital received for services
provided to populations whose coverage is funded
by the assessment.
AHCCCS estimates that hospitals received coverage
payments of $1.02 billion in FY 2016, or $774.7 million
above the $250.2 million in assessments these
hospitals paid. AHCCCS reports that all hospitals that
served Medicaid patients in FY 2016 (except for 2
hospitals that closed) had coverage payments from
Proposition 204 and Adult Expansion enrollees that
exceeded the costs of their Hospital Assessment
payment.
Due to reporting lags between providers and
AHCCCS health plan contractors, payments can
take upwards of 3-6 months before paid claims
appear in AHCCCS’ database. Because of this lag,
AHCCCS was not able to report the FY 2016
estimated Medicaid payments each hospital
received by the August 1, 2016 reporting date in
A.R.S. § 36-2903.08. (Patrick Moran)
AHCCCS – Report on Interstate Agreement with
Hawaii – Pursuant to A.R.S. § 36-2925H, the Arizona
Health Care Cost Containment System (AHCCCS)
has submitted its annual report on the status of an
Interstate Agreement with the State of Hawaii.
This report summarizes the continued activities
associated with the agreement between AHCCCS
and Hawaii for Medicaid data processing. In FY
2016, Arizona received $6.9 million in revenues from
Hawaii while spending $7.8 million for staffing and
automation costs associated with implementing the
agreement. During FY 2016, the balance of 2 funds
used for the agreement decreased by $(920,600),
from $2.8 million to $1.9 million. AHCCCS indicated

13

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Summary of Recent Agency Reports (Continued)
that expenditures exceeded revenues in FY 2017 due to
a delay in when Hawaii reimburses the agency for
services provided. AHCCCS has since been reimbursed
for all contracted costs incurred during FY 2016. (Jon
Stall)
AHCCCS/Department of Health Services – Report on
Reconciliation Payments – Pursuant to the FY 2017
General Appropriation Act (Laws 2016, Chapter 117), the
Arizona Health Care Cost Containment System
(AHCCCS) submitted its report on reconciliation
payments and penalties received and deposited during
FY 2017. AHCCCS reports that during that 12-month
period they deposited $2.4 million into the General Fund
and $3.5 million into the Hospital Assessment Fund, and
used $9.3 million to offset Federal Medicaid Authority
expenditures from reconciliation payments and
penalties/sanctions.
In addition to amounts reported by AHCCCS, DHS
reports that $1.1 million was returned to the General
Fund and $1.6 million to the Federal government from
reconciliation payments in FY 2017. Laws 2015, Chapters
19 and 195 transferred the administration of state
contracts with Regional Behavioral Health Authorities
(RBHAs) from DHS to AHCCCS on July 1, 2016.
Reconciliation payments to DHS during FY 2017 are
associated with Medicaid services provided prior to the
transfer of administrative responsibilities to AHCCCS.
The state limits financial risks and profits for health plans
and RBHAs for most Medicaid populations (the
maximum percentage of loss and profit varies by
Medicaid population). Reconciliation payments are
made by health plans/RBHAs to the state if profits
exceed the set level. A penalty, or sanction, may be
assessed against health plans/RBHAs for the failure to
demonstrate compliance with their contractual
responsibilities. (Jon Stall)
Attorney General – Quarterly Report on Internet Crimes
Against Children Enforcement Fund Expenditures – A.R.S.
§ 41-199 requires the Attorney General (AG) to report
quarterly on expenditures from the Internet Crimes
Against Children (ICAC) Enforcement Fund and progress
made towards ICAC goals. The ICAC Enforcement Fund
was created in FY 2015 with an annual deposit of
$900,000 in revenues from lottery games that are sold
from a vending machine in age-restricted areas. Monies
in the fund are utilized to support the ICAC Task Force
housed within the Phoenix Police Department which
works with federal, state, and local law enforcement to
investigate technology-facilitated sexual exploitation of
children.

Through the fourth quarter of FY 2017, a total of
$753,700 in lottery revenues were deposited into the
ICAC Enforcement Fund. Additionally, a total of
$187,300 was expended in the fourth quarter of FY
2017 to help pay for the operating costs of the ICAC
Task Force. These expenditures are in addition to
$444,700 expended in the previous quarters,
bringing total FY 2017 expenditures to $632,000.
As reported by the AG, the FY 2017 expenditure
plan for the ICAC Enforcement Fund allocates
monies to the hiring of 4 new positions within the
Phoenix Police Department; one-time equipment
costs of the task force including computers,
unmarked vehicles, educational materials, monitors,
cameras, software, hardware, a forensic van, and a
crime scene van; annual equipment costs including
computers, software, and hardware; and law
enforcement training.
As of June 30, 2017, the ICAC Enforcement Fund
had a fund balance of $1,921,600 and
encumbrances of $1,435,900. (Samuel Beres)
Attorney General – Quarterly Reports on Legal
Settlements – Statute requires the Attorney General
(AG) to report quarterly to the JLBC on the receipts
to and disbursements from the Antitrust
Enforcement Revolving Fund, the Consumer
Protection - Consumer Fraud (CPCF) Revolving Fund
and the Consumer Restitution and Remediation
Revolving Fund (including its 2 subaccounts), as well
as deposits made to the General Fund.
In the fourth quarter of FY 2017, the AG deposited a
total of $6.5 million into various consumer accounts.
Of that amount, $1.5 million into the CPCF Revolving
Fund, $4.8 million into the Consumer Restitution
Subaccount, and $252,700 into the Consumer
Remediation Subaccount. No monies were
deposited into the Antitrust Enforcement Revolving
Fund or the General Fund this quarter. Only the
$252,700 deposit to the Consumer Remediation
Subaccount requires JLBC review prior to
expenditure.
Deposits to the CPCF Revolving Fund
The AG deposited $1.5 million in the fourth quarter
of FY 2017 to the appropriated CPCF Revolving
Fund, which may be used for any purpose
permitted by statute. Of that amount, $930,000 was
from a settlement with Johnson & Johnson
Consumer Inc., and $225,000 was derived from a
settlement with Theranos Inc.

14

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Summary of Recent Agency Reports (Continued)
Johnson & Johnson
Arizona sued McNeil Consumer Healthcare, a division of
Johnson & Johnson, alleging that the company had
engaged in deceptive and/or unfair acts and practices
in connection with the advertisement or sale of
pharmaceutical products. As a result of a settlement, the
Attorney General obtained $930,100, which is to be
deposited into the Consumer Fraud Revolving Fund. The
settlement also prohibits McNeil from engaging in these
acts in the future.
Theranos
Arizona sued Theranos, alleging that the company
engaged in deceptive and unfair acts and practices in
connection with the advertisement or sale of blood
testing services.
Deposits to the Consumer Restitution Subaccount
The AG deposited $4.8 million in the fourth quarter of FY
2017 to the non-appropriated Consumer Restitution
Subaccount to compensate specific entities for
economic loss resulting from consumer fraud. Of that
amount, $4.7 million was the result of the settlement with
Theranos Inc., and $111,000 came from small legal
settlements under $250,000 in value and interest income.
Deposits to the Consumer Remediation Subaccount
The AG deposited $252,700 in the fourth quarter of FY
2017 to the partially-appropriated Consumer
Remediation Subaccount to rectify violations of
consumer protection laws. All of these funds resulted
from small legal settlements under $250,000 in value and
interest income. An expenditure plan must be reviewed
by the JLBC before any funds are spent from this
account. Those reviews have not yet occurred. (Samuel
Beres)
Department of Child Safety – Monthly Report on Hiring –
Pursuant to a FY 2017 General Appropriation Act
footnote, the Department of Child Safety (DCS) reported
on its progress in hiring and retaining child safety staff
through June 2017. (See Table 7 below.)
The number of direct line child safety staff (caseworkers,
caseworkers in training, caseworkers awaiting training

and hotline staff) was 1,345 in June, or (61) fewer
staff than the number of funded positions. Most of
the difference between funded positions and filled
positions was driven by lower-than-budgeted
staffing of caseworkers, which was partly offset by
higher-than-budgeted staff in training. Total direct
line staff increased by 2 since May.
There were also 1,385 non-direct line child safety
staff in June 2017, or (126) fewer staff than the
funded staffing level. The budgeted staffing level is
1,511 excluding Attorney General positions. Total
non-direct line positions decreased by (3) since
May. (Patrick Moran)
Arizona Department of Corrections - Third-Party
Report on Arizona Inmate Management System
(AIMS) Replacement – Pursuant to a FY 2017
General Appropriation Act footnote, the Arizona
Department of Corrections (ADC) has provided a
quarterly update of the AIMS Replacement project.
The third-party reviewer continued to give a positive
review of the fiscal status of the project and the
quality of investment and problem solving occurring
between the vendor and ADC. The review
described the planned schedule as strained citing
that certain deliverables and testing dates have not
occurred as planned. (Micaela Larkin)
Department of Economic Security – Report on
Arizona Training Program at Coolidge (ATP-C)
Campus and Other Placements – A footnote in the
FY 2017 General Appropriation Act requires the
Department of Economic Security (DES) to report on
placements of developmentally-disabled (DD)
clients into state-owned Intermediate Care Facilities
for Individuals with Intellectual Disabilities (ICF-IID) or
at the ATP-C campus in FY 2017. DES reports that
there was 1 new permanent placement into a stateoperated ICF-IID in Phoenix in FY 2017. This member
was admitted to the Phoenix ICF-IID due to medical
needs of the client that required 24-hour nursing
support. There were no new placements into any
other state-run ICF-IID or the ATP-C campus in FY
2017. (Patrick Moran)

Table 7
DCS Filled FTE Positions as of June 2017
Caseworkers
Hotline Staff
Staff in Training
Subtotal - Direct Line
Subtotal - Non-Direct Line Staff
Grand Total 1/
____________
1/ Excludes 276.2 Attorney General Staff.

Funded
1,190
76
140
1,406
1,511
2,917

June
1,072
71
202
1,345
1,385
2,730

Difference
(118)
(5)
62
(61)
(126)
(187)

15

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Summary of Recent Agency Reports (Continued)
Ombudsman-Citizens Aide Office – Annual Report –
Pursuant to A.R.S. § 41-1376, the OmbudsmanCitizens Aide is required to submit an annual report
by January 1 summarizing their activities during the
previous fiscal year (FY), and semiannually present
this report before Legislative Council. The
Ombudsman-Citizens Aide issued an annual report

for Calendar Year (CY) 2016 dated June 13, 2017. The
CY 2016 annual report cites examples of cases in the
office’s 3 focus areas: general complaints about state
agencies, Department of Child Safety cases, and
public access cases. DCS cases are 47.25% of total
workload. (Steve Grunig)

June Spending
June 2017 General Fund spending was $674.3 million,
which represents a decrease of $(174.3) million
below June 2016. The significant decline in June
spending is due to the large amount of one-time
spending that occurred in June 2016, which was
largely payments to eliminate the Universities, DCS
and DES “rollovers”.
Year to date, FY 2017 spending was $9.56 billion, or
$(4.3) million below last year. This level of spending
was $(75) million below the amount assumed in the
enacted budget. (See Tables 8 & 9).
•

Universities’ spending decreased by $(176.5)
million during FY 2017. This is the result of: 1)
removing $200 million of one-time funding for the
Universities’ to eliminate their payment deferral;

and 2) Funding increases to the Universities for
operating and capital purposes.
• Year to date, the Department of Education spent
$135.5 million more than the prior year. This
spending growth is mostly due to enrollment growth
and standard inflation funding provided in the
enacted budget.
• During FY 2017, Department of Health Services
spending declined by $(530.1) million, which
reflects the transfer of the state’s Medicaid
Behavioral Health program to AHCCCS.

Table 8
General Fund Spending ($ in Millions)
Change From
June 17

June 16

YTD Change
Year-to-Date

from FY 16

Agency
AHCCCS

145.4

27.5

1,749.7

552.2

Corrections

98.9

16.5

1,044.2

7.0

Child Safety

27.3

(7.6)

374.2

(49.0)

Economic Security

10.7

(39.7)

523.9

(3.8)

Education

270.3

(15.6)

4,080.9

135.5

Health Serv ices

(2.8)

(20.8)

75.6

(530.1)

Public Safety

5.4

2.6

113.2

22.2

School Facilities Board

14.2

(25.8)

228.0

(2.7)

Univ ersities

55.8

(99.9)

693.2

(176.5)

Leaseback Debt Serv ice

0.0

0.0

84.1

0.0

Other

49.1

(11.5)

591.9

40.9

Total

674.3

(174.3)

9,558.9

(4.3)

16

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Table 9

General Fund Spending
($ in Thousands)
Agency
Dept. of Admin./Automation Projects Fund
ADOA – Sale/Leaseback Debt Service
Office of Administrative Hearings
Commission of African-American Affairs
Department of Agriculture
AHCCCS
Attorney General
State Board of Charter Schools
Department of Child Safety
AZ Commerce Authority
Community Colleges
Corporation Commission
Department of Corrections
County Funding
AZ State Schools for the Deaf & Blind
Office of Economic Opportunity
Department of Economic Security
State Board of Education
Department of Education
DEMA
DEQ – WQARF
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Department of Financial Institutions
Department of Fire, Bldg and Life Safety
Department of Forestry and Fire Management
Department of Gaming
Arizona Geological Survey
Governor/OSPB
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Department of Housing
Independent Redistricting Comm.
Department of Insurance
Judiciary
Supreme/Superior Court
Court of Appeals
Department of Juvenile Corrections

June 17
1,987.5
62.1
9.0
833.2
145,414.9
2,961.0
94.3

Change from
June 16
(4,089.7)
(1.7)
0.1
199.2
27,480.5
(180.4)
22.2

Year-to-Date
34,604.3
84,117.4
860.5
122.9
9,160.5
1,749,729.3
24,085.4
1,010.4

YTD Change
from FY 16
3,540.0
2.8
(1.2)
(3.9)
919.9
552,175.1
364.9
(35.9)

27,282.8

(7,583.0)

374,189.5

(49,032.7)

1,791.7
72.9
100.6
98,912.6
1,212.4
98.3
10,710.8
95.3
270,300.9
5,111.2
15.3
67.7
54.1
320.8
2.4
664.3
573.8
(2,774.4)
191.7
81.2
13.2
86.5
509.2

(491.6)
(2,613.3)
34.5
16,458.2
56.7
98.3
(39,733.1)
8.7
(15,584.9)
701.3
5.8
13.2
(23.0)
118.3
(185.0)
(654.2)
(53.7)
(82.0)
(20,794.8)
6.5
15.4
13.2
(17.1)
67.0

21,680.9
54,181.5
859.7
1,044,198.5
14,000.5
21,120.4
963.4
523,867.6
925.1
4,080,893.6
12,509.6
2,823.6
187.0
575.4
741.5
2,925.0
0.1
10,576.5
1,979.5
8,954.2
75,641.5
3,151.2
824.3
811.5
1,053.7
5,078.1

(5,119.1)
(73.6)
250.7
7,025.9
8,000.0
(2,001.7)
963.4
(3,824.8)
(270.2)
135,515.8
(1,932.0)
(4,176.4)
(0.3)
31.7
(167.6)
(4.5)
(2,207.3)
1,831.6
185.1
(936.9)
(1,135.0)
(530,134.2)
(6.0)
(73.7)
811.5
(706.2)
8.6

2,653.7
1,509.7
2,873.8

64.6
169.5
(617.9)

96,001.6
14,222.5
23,339.2

5,270.9
(78.0)
(2,330.0)

17

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2017

Table 9 (Continued)

Agency
State Land Department
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Mine Inspector
Nav. Streams & Adjudication
Occupational Safety and Health Review
Arizona State Parks Board
Phoenix Convention Center
Comm. for Postsecondary Ed.
Department of Public Safety
Public Safety Personnel Retirement System
Radiation Regulatory Agency
Real Estate Department
Department of Revenue
Rio Nuevo Distribution
School Facilities Board
Secretary of State
Tax Appeals Board
Office of Tourism
Department of Transportation
Governor's Office on Tribal Relations
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Department of Veteran Services
Department of Water Resources
Department of Weights & Measures
Other - State Treasurer/JP Salaries
Other - ADOT Capital (Navajo Nation Projects)
Other - ADOT Capital (Local HURF Distribution)
Other
Total

June 17
1,026.7

Change from
June 16
(1,553.5)

Year-to-Date
11,626.6

YTD Change
from FY 16
(776.8)

(205.9)
984.2
221.2
717.2
625.9
131.6
9.7
5,375.2
4.5
201.6
3,575.4
13,988.5
14,190.9
870.4
18.7
12.5
12.4

(2,078.5)
90.2
43.1
128.1
(61.1)
(7.9)
(1.1)
(5.2)
2,630.7
4.3
(107.7)
1,324.4
979.7
(25,827.9)
(1,606.4)
(19.2)
(30.2)
1.6

17,936.1
13,316.6
2,309.5
6,696.4
8,905.6
1,172.4
127.4
20,449.0
1,396.8
113,244.4
6,000.0
1,563.2
2,454.3
31,262.9
13,988.5
227,962.7
25,123.9
267.0
7,112.0
50.5
57.0

(668.5)
(366.4)
47.7
452.6
958.9
(8.0)
6.6
(2.5)
(423.0)
22,221.7
(32.3)
(107.1)
564.8
979.7
(2,658.8)
10,274.6
4.3
8.3
7.6
(0.6)

496.0
25,437.3
8,439.7
21,457.6
620.6
2,180.4
54.5
674,341.0

(9,079.1)
8,689.8
(28,007.0)
(71,552.5)
(253.2)
558.1
(130.8)
(60.5)
(1,200.0)
(174,304.2)

36,116.4
298,397.6
101,227.0
257,491.1
5,920.9
12,039.6
0.8
1,082.5
1,500.0
30,000.0
181.7
9,558,948.0

5,300.3
(82,279.5)
(30,185.4)
(69,331.6)
(89.8)
230.8
(1,192.2)
(190.5)
300.0
30,000.0
38.1
(4,270.5)

JLBC
Jul-16

Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
Jan 17

3.9% Y/Y Growth
(May 2017)

Jan 09

$19

3

JLBC
100%

Jul 06

Jul 16

35,000

Jan 17

40,000

Jul 15

8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%

Jan 16

2,200

Jul 14

2,300

Jan 15

Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
Jan 17

Thousands of Jobs
2,400

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

Jul 07

Jan 07

$20

Jul 05

$25.11 / Hour
(May 2017)

Jan 06

$23

Jul 04

$24

Jan 05

$25

Jul 03

$27

Jan 04

Average Hourly Earnings – Private Sector

Jul 02

JLBC

Jan 03

1

Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
Jan 17

2……Total Non-Farm Employment
3……Average Hourly Earnings – Private Sector
4……Initial Claims for Unemployment Insurance
5……State Sales Tax Collections – Retail Category
6……State Sales Tax Collections – Contracting
Category
7……Residential Building Permits
Year Over Year Growth (%)

Page:

Jan 02

$26

Total Monthly Claims

July 2017
Appendix A

Jul 01

Jan 01

Jan-17

Jul-16

Jan-16

Jul-15

Jan-15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Year Over Year Growth (%)

Jan-17

12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%

Jul-15

Jan 08
July 08

$21

Jan-16

Jan 07
July 07

$ / Hour
$22

Jan-15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

Year Over Year Growth (%)

Arizona Economic Trends

Total Non-Farm Employment

2,900

2,800

2,700

2,600

2,500

$22.73 / Hour
(Octoberjobs
2014)
2,747,000
(May 2017)

2,100

1.8% Y/Y Growth
(May 2017)

2

Initial Claims for Unemployment Insurance

45,000

30,000

19,802 Claims
(May 2017)

25,000

20,000

15,000

10,000
5,000

150%

(2.5)% Y/Y Growth
(May 2017)

50%

0%

-50%

4

Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
Jan 17

Building Permits

JLBC
Excludes temporary 1 ¢ sales tax

60,000

50,000

12-Month Moving Sum
Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jul 14

7.2% Y/Y Growth
(June 2017)

* January 2014 estimate adjusted downward by $30 million to reflect onetime category shift.

5

Residential Building Permits

100,000

90,000

80,000

70,000

Single Family Unit - 25,491 Permits
Multi-Family Unit - 11,690 Permits
(May 2017)

40,000

30,000

20,000

10,000

0

7

JLBC
Jan 08

Excludes temporary 1 ¢ sales tax

Jul 15

Jan 17

Jul 16

Jan 16

Jan 08

Jan 17

Jul 16

Jan 16

Jul 15

Jan 15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

$50

Jan 15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
Jan 07

$100

July 07

$205.1 million
(June 2017)
July 06

$ in Millions

$175

July 07

Jul 16
Jan 17

$200

Jan 07

Jul 15
Jan 16

$ in Millions
$225

July 06

Year Over Year Growth (%)

Jan 17

Jul 16

Jan 16

Jul 14
Jan 15

$125

Jul 15

Jan 15

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

July 06

* Jan 14

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
* Jan 14

JLBC
Jan 07

July 06

Year Over Year Growth (%)

State Sales Tax Collections – Retail Category
State Sales Tax Collections – Contracting Category

$250
$100

$75

$42.3 million
(June 2017)

$150
$25

$0

4.3% Y/Y Growth
(June 2017)

6